Analysis Topic: Economic Trends Analysis

Thursday, March 17, 2016

The Office of Budgetary Responsibility has once more dutifully pumped out economic propaganda for the UK government in its latest report, where the most notable revision was to increase the amount the government will borrow over its term in office from the original £115 billion (May 2015) to now £178bn, a 54% increase in the amount they said they would borrow at the outset, and which is set against their November 2015 revision higher to £143bn.

Monday, March 14, 2016

This is a guest post by Joseph Y. Calhoun at Alhambra Investment Partners. His post starts off with this quote by Stanley Fischer, Fed Vice-Chair in a speech before the National Association for Business Economics.

Says Fischer "We may well at present be seeing the first stirrings of an increase in the inflation rate -- something that we would like to happen."

Monday, March 14, 2016

In his final State of the Union Address, President Obama chided, "Anyone claiming that America's economy is in decline is peddling fiction." Following the recently released February Non-farm Payroll Report, which showed a net increase of 242 thousand jobs, he doubled down on that same contention. The seemingly robust number of new jobs created prompted the President to remark, "The numbers and the facts don't lie, and I think it's useful given that there seems to be an alternative reality out there from some of the political folks that America is down in the dumps. It's not. America is pretty darn great right now."

Wednesday, March 09, 2016

Economists and professional investors follow the Baltic Dry Index because it is a leading indicator on the forecast for international trade. A week ago this gauge hit an all time low. Since then a small upturn has moved the index upward slightly. Hellenic Shipping News observes in Baltic Dry Index climbs to 349, up 7.

“Baltic Dry Index is compiled by the London-based Baltic Exchange and covers prices for transported cargo such as coal, grain and iron ore. The index is based on a daily survey of agents all over the world. Baltic Dry hit a temporary peak on May 20, 2008, when the index hit 11,793. The lowest level ever reached was on Wednesday the 10th of February 2016, when the index dropped to 290 points.”

Wednesday, March 09, 2016

When historians sort out this era of once-a-decade financial bubbles, they’ll marvel at how dissimilar the drivers of each boom were. The junk bonds of the 1980s were essentially leveraged tools for extracting wealth from companies. The dot-coms of the 1990s were vehicles for exotic new technologies and untested business models. The sub-prime mortgages and credit default swaps of the 2000s were semi-fraudulent fee-generation schemes.

All, in retrospect, were strange, unsteady foundations on which to build a global economy. But they look positively sane compared to the pillars of the current expansion: China and fracking.

Monday, March 07, 2016

Georgi Vuldzhev writes: The political circus of the 2016 presidential election has revived and reinvigorated popular belief in age-old protectionist fallacies. Currently both Donald Trump and Bernie Sanders, are both in favor of expanding protectionist trade policy, with both of them arguing that free trade “destroys” jobs and hurts domestic workers and producers by exposing them to foreign competition. Both candidates espouse an utterly misguided zero-sum view of economics, in which one side to an exchange wins only when the other side loses. Both men are, of course, completely wrong.

Monday, March 07, 2016

China never had an actual economic model or growth model. It simply printed an obscene amount of money, especially after 2008, and used it to build factories, 30-story see-through apartment blocks and highways into nowhere cities, without giving much if any thought to where this would lead when their formerly rich western customers had less to spend on its ever increasing amount of ever more useless products, or when its workers would stop spending ever more on apartments as investments, or when no more roads and bridges were needed because nowhere was already in plain sight. Or all of the above. It was ‘to infinity and beyond’ from the start, but that’s a line from a kids’ fantasy story, not a 5-year plan or an economic model.

Friday, March 04, 2016

Jobs came in well above expectations at 242,000 despite tax data collections that support a Job Growth estimate of 55,000 to 85,000 .

A quick dive into the details shows the report is a lot weaker than the headline number indicates. Of the 242,000 jobs added, 304,000 of them were part time. That means the economy actually shed 62,000 full-time jobs.

Average hours worked declined as did average weekly earnings despite minimum wage hikes in numerous states at the beginning of the year.

Friday, March 04, 2016

It’s my favorite day of the month. The Bureau of Lies & Scams issues their double seasonally adjusted, massaged to provide a happy ending, birth death adjusted unemployment propaganda, designed to keep the masses in the dark about their own dire financial circumstances. Even though the equally manipulated GDP is at 1% or below, retail sales are plunging, corporate profits plummeted by 15% in the 4th quarter and Challenger & Grey corporate layoff announcements were up 42% in January versus last year, our fraudulent friends at the BLS announced glorious employment figures this morning.

Thursday, March 03, 2016

A cacophony of recession chatter is filling the airwaves. Some experts are already declaring we are in one while others are raising warning flags. Their message has not been lost on the masses: Google searches for the word "recession" have risen to the highest level since 2012. Interestingly, many commentators cite the 20% decline in global stock prices as the warning signal, if not the cause. But veteran investor Joe McAlinden believes the U.S. economy will continue to expand in the year ahead.

Tuesday, March 01, 2016

"Do not wait for ideal circumstances nor for the best opportunities; they will never come." ~ Anonymous

India has had many aspirations to overtake China, but this is more of a pipedream than reality. India's corruption makes China's corruption seem non-existent. Add in the traffic jams, and filth one has to deal with in parts of Mumbai and Delhi, and the allure of investing in India loses its appeal rather rapidly. This is the reason India continues to suffer such a massive amount of brain drain. Smart Indians understand that their best option is to seek greener pastures. Modi's government had the strongest mandate of any government, yet like all his predecessors he seems to be all talk and little to no action; he has failed to implement any noteworthy changes.

Monday, February 29, 2016

A little over six months ago the owners of the Baha Mar, a $3.5 billion Bahamian resort, filed for bankruptcy. Shoddy construction from the China State Construction Company led to delays resulting from leaking plumbing, porous Chinese concrete and large cracks at critical stress points. The doomed project even led to the death of two Chinese workers. Although the building is 97% complete, the structural deficiencies make it uninhabitable. Given the Chinese proclivity to build ghost towns, it makes you wonder if their construction crews are accustomed to erecting buildings that are never intended to be occupied.

Friday, February 26, 2016

In their second estimate of the US GDP for the fourth quarter of 2015, the Bureau of Economic Analysis (BEA) reported that the economy was growing at a +1.00% annualized rate, up +0.31% from their first estimate for the fourth quarter, but still down -0.99% (nearly half) from the third quarter.

All of the net improvement can be attributed to one line item, inventories -- which were up the same +0.31% as the headline aggregate -- while the sum of the changes in the other line items netted out to zero.

Thursday, February 25, 2016

Did you ever ask yourself what this central bank obsession with inflation is really all about? After all, it is highly ironic that these erstwhile stewards of price stability have now perversely morphed into the frantic pursuit of currency destruction. This is because the current doctrine adopted by global central bankers is that growth comes from inflation; and without inflation there can be no growth. Therefore, as their new dogma dictates, inflation must be achieved at any cost.

Thursday, February 25, 2016

So the S&P 500 is out of correction for now and the coast is clear. NOT! This is exactly what we’ve been predicting would happen – after reaching new lows, stocks would have to bounce before they inevitably resume their longer-term trend, which is down.

But stocks haven’t been the only victims of late. Just a couple weeks ago the January nonfarm payroll report came in at 151,000 jobs. So much for the expected 190,000! And of the ones reported, they were mostly low-wage jobs.

Thursday, February 25, 2016

If you join a poker game and can’t identify the “mark,” then chances are, you’re it! The “mark” is the person at the game who is less experienced, or perhaps is given to reckless betting. By including this player in the game, everyone else has an opportunity to walk away a winner.

But don’t lose sight of the bigger picture. Not everyone is a winner, and typically someone ends up the big loser!

The same principle works when countries get together for free or open trade. Everyone talks about how great it will be, how much their economies will grow, about efficiencies and new opportunities. But they almost never talk about the people who will lose.

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